Sunday, March 23, 2014

Feasibility: High. Southern held out
of Amtrak for almost eight years and was still able to run a top notch train
(Crescent). Meanwhile, the Seaboard Coast Line nearly stayed out of Amtrak so
it would make sense if the ACL and SAL had merged with other railroads instead
of each other, they would still be running trains today.﻿

Feasibility: Moderate to high. If the
federal government had reduced the burdens it imposed on the railroads much
earlier, then, the U.S. would still have the world's best passenger rail
system. Of course, the side effect would be that no one would be talking about
high speed rail due to the efficiency of the networked rail system.

Also, the effort to provide a
national intercity rail system composed of nine major railroads would have the
support of the Bush 43 and Obama Administrations.﻿

Feasibility: High. Both railroads
reluctantly joined Amtrak, but they could have easily have gone the other way.
If the Santa Fe and the SCL had joined the six holdouts, there's no doubt that
those two railroads would have continued operating trains to this day.

Amtrak would be a reduced entity
because of NS's push to mandate competition in the intercity passenger sector.
Section 214 of PRIIA and Amtrak's losses when it comes to bidding would have
likely been a campaign issue in 2016 with Republicans wondering whether if
Amtrak needs to exist at all when various host railroads and independent
operators are dominating the intercity rail market.﻿

Feasibility: Low. As ideal as it
might have been, the Democrats were very firm in their opposition to giving
federal money to private railroads, so there wouldn't have been enough votes to
do anything but to nationalize the passenger trains. ﻿

Other rail modes: Low. Maglev is
expensive and would have been excluded from the 30/10 Plan. The Airtram idea
may have been scrapped just due to time. There was a limited amount of time for
the People Mover to have been built, and if no tracks had been laid down by
1981, then, it just wasn't going to happen. The Monorail may have been
built--only if the original subway system had already been in place. The
Carveyor was just an idea that was too futuristic. ﻿

Saturday, March 1, 2014

Introduction

The purpose of this post is to demonstrate how
disruptions, innovations, and rent seeking apply to the world of passenger rail
just like it does to any other form of business.

Here are some examples of business disruptions. Such
actions have resulted in life being much better for society today.

Rent seeking is the yang to disruption's yin. As Steve Blank says about this counterbalance:

Rent seekers are individuals or
organizations that have succeeded with existing business models and look to the
government and regulators as their first line of defense against innovative
competition… Rent seekers spend money to increase their share of an existing
market instead of creating new products or markets…

Overhauling the Paradigm Could Make the Passenger Train Thrive Once Again

Here are some possible scenarios of how passenger rail could drastically change for the better:

The recent move by the feds to allow Caltrain to use European style equipment on U.S. tracks

Different ways to finance passenger rail given that politicians aren't readily receptive to funding trains

Who Are Passenger Rail's Innovators Today?

Passenger rail ridership in America is at its highest in
decades but most expansion plans to draw even more riders are stuck at the
station due to congressional gridlock. There are disagreements over whether
Amtrak—and by default, the public sector—should continue its role as a monopoly
operator or if other carriers—some of whom are privately run—should be allowed
to compete.

In the midst of the fight over passenger policy, there
are several renegades who are not waiting for Congress or the White House to
set new laws. In the last three years, Iowa Pacific has emerged as a potential
shortline powerhouse by planning and providing passenger service to areas that hadn't carried people in decades while Florida East Coast’s All Aboard Florida
has laid the groundwork for passenger service in 2015. Meanwhile in Amtrak's own backyard, Housatonic and New
England Central have plans to provide service to cities that are underserved by the national carrier.

Last year, two different companies provided plans to run
private service between Portland, ME and Montreal--one during the day, the other, at night. For years, the feds have
included a Boston-Montreal route as part of a national high speed rail system,
but the problem is that HSR money has dried up and even if it hadn't, there
would have been some serious disagreements over where the route should go (via
the Downeaster/western ME, central NH or Springfield, MA/Vermonter).

The Roadblocks to Innovation

Just as there are people who are thinking beyond an Amtrak (-only) world, there are many others who aren't willing to give up the existing order without a fight:

The aviation and highway lobbies along with their allies like think tanks and politicians

Amtrak management's complacency (continued focus on the NEC at the expense of its other routes)

Rail activists who support the status quo and oppose competition

Amtrak friendly politicians who resist meaningful changes for the national carrier (NJ Transit & politicians and the Northeastern congressional delegation)

A segment of the rail community that is opposed to lighter equipment being used because they allege that the European cars are "too dangerous" despite the fact that bulky equipment currently used on U.S. rails has its own safety issues

True Believers who think that giving more money to Amtrak is the answer while failing to realize that the agency's management is too focused on the Northeast

The FRA's inane standards on things like equipment crash-worthiness

How Rent Seeking Is Blocking a 21st Century Rail Renaissance

I will now provide some examples of how rent seeking behavior is hurting the cause for passenger rail by responding to three of Blank's quotes:

Instead of offering better products or better service at
lower prices, rent seekers hire lawyers and lobbyists to influence politicians
and regulators to pass laws, write regulations and collect taxes that block
competition.

The FRA’s foot dragging on Section 214 provisions led
Amtrak to tell three states to pay for a non-corridor train or lose service in
2016. That lax federal enforcement has also led Amtrak management to not make
any serious efforts to provide additional equipment for the Western long
distance trains.

The national operator is planning to completely phase out
its remaining Heritage fleet while providing no additions to its eastern long
distance capacity and completely neglecting inactive Superliners. Rumor has it is that Amtrak would rather scrap its older equipment than see other companies use
it for state-sponsored services.

Startups, investors and the public have done a poor job
of calling out the politicians and regulators who use the words “innovation means
jobs” while supporting rent seekers.

The Nightmare Scenario or the possibility of Amtrak only
running overnight routes (plus the NEC) would stifle any hopes for reviving
passenger rail in this country yet most rail advocates haven’t gotten this message,
choosing instead to support the near monopoly.

On the other hand, it’s to the AIPRO’s credit that it got a jump start in challenging the rent seeking activities by pointing out the
regulatory burdens. Now, someone needs to point the following out to the
unions: If they are opposed to non-Amtrak operators, then they are in effect opposed to more jobs.

Conclusion

Innovation has helped other businesses and can help passenger rail—if entrepreneurs are allowed to. Rent seekers are around the corner and will seek to keep the laws as they are. If this latter group succeeds, then the public will be the biggest losers as America would continue to have mediocre rail service, and anti-rail forces will then continue to mock passenger trains as "outdated."